Decoding Penalty under section 270A of the Income Tax Act, 1961
Section 270A has been inserted under the Income Tax Act, 1961 to take effect from 1.4.2017 i.e. from assessment year 2017-18, to provide for the levy of penalty on the ‘under-reported income’. Hon’ble Finance Minister while presenting the Finance Bill, 2016 mentioned about his resolve to reduce the litigation and provide certainty in taxation including in the matter of penalty. Memorandum explaining the provisions of the Finance Bill, 2016 gave an insight into the amendment in penalty provision by terming the proposal to introduce section 270A as ‘Rationalisation of penalty provisions’ emphasizing further that in order to rationalize and bring objectivity, certainty and clarity in the penalty provisions, it is proposed that section 271 shall not apply to and in relation to any assessment for the assessment year commencing on or after the 1stday of April, 2017 and subsequent assessment years and penalty be levied under the newly inserted section 270A with effect from 1stApril, 2017. The new section 270A provides for levy of penalty in cases of underreporting and misreporting of income.
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